Uber Accused Of Using Algorithms To Boost Profits At Drivers’ Expense

Two academic studies reveal that Uber implemented hidden pricing algorithms which both increased fares and reduced driver earnings for millions of trips.

Uber faces new criticism because researchers at Columbia Business School released their second major academic report, accusing the company of using hidden algorithms to boost its profits by charging passengers more and paying drivers less. The study was first reported by The Guardian.

The research team analyzed 24,000 US trips together with 2 million ride requests. The study revealed Uber’s “upfront pricing” system from 2022 allowed the company to both increase fares for riders and decrease payments to drivers.

Business Insider suggests that this pricing strategy may be a key factor behind Uber’s 300% stock surge over the past three years. This method was described by the researchers as “algorithmic price discrimination” that affected “billions of … trips, systematically, selectively, and opaquely.”

“Uber says ‘we know more about driver and rider behaviour, so we can figure out who is willing to pay more [as a passenger] or accept less [as a driver].’ I’m in awe of what they have been able to accomplish,’” said lead researcher Len Sherman, as reported by The Guardian.

The study revealed Uber’s profit share known as the “take rate” increased from 32% to exceed 42% during the last quarter of 2024. The company retained higher portions of each fare payment while drivers received smaller amounts of money.

The Guardian also notes that a new University of Oxford research revealed that Uber’s UK take rate increased from 25% to 29% and exceeded 50% on some trips.

A New York Uber driver told Business Insider he once received over 50% of each fare. But since upfront pricing was introduced in his area, his share has dropped—often to under 30%.

He shared screenshots and payout notes from recent trips with Business Insider, showing a consistent decline. “They’ll tell you that they paid Uber $60, and you’re lucky if you get $20,” he said to Business Insider

Both reports say the shift began when Uber rolled out dynamic and upfront pricing algorithms that replaced its earlier surge pricing model. The Guardian argues that the new pricing systems allow Uber to control fares better but reduce transparency for both drivers and passengers according to critics.

Uber denied the claims. “Our pricing is designed to be transparent and fair,” a company spokesperson, as reported by The Guardian. “We do not personalise prices based on personal data, and claims of unfair manipulation are not supported by evidence,” the spokesperson added.